Fundamentals Level Skills Module, Paper F6 (MYS)

Transcription

1 Answers

2 Fundamentals Level Skills Module, Paper F6 (MYS) Taxation (Malaysia) December 20 Answers and Marking Scheme (a) Thrivandrum Sdn Bhd Income tax computation Year of assessment 20 Net profit before taxation 638,360 Rental of excess space NIL Dividend single tier (exempt) 8,000 Discount from supplier NIL Interest charged to credit customers NIL Sample of e-books NIL Jute bags with company logo NIL Sample gifts of its product to visitors NIL Travel tickets for politicians,000 Patents and trademark 2,500 Depreciation 2,000 Launch expenses NIL Redemptive vouchers NIL Gold bracelet for a key customer 2,000 Trip for dealer NIL Pension fund (Working ) 960 Amortisation of lease 6,000 Lease rental on car (Working 2) 5, ,960 20,500 Adjusted income 645,460 * Less: Capital allowance (5,000) Chargeable income 640,460 *mark given for description Workings:. Excess over 9% disallowed: Two employees (4,000 x 2) x 2 = 96,000. Excess is 20 9 = % x 96,000 = Claim for 23 months from February 2009 to December 200 (2,820 x 23 = 64,860) exceeds 50,000. Hence the payments in the current year are not deductible. (b). Rental of excess office space is business income. [Tutorial note: principle established in the ALB case] 2. Single-tier dividend is tax exempt. 3. Discount received from suppliers relates to purchases. Interest charged to credit customers relates to sales. 4. Promotional materials such as samples of the company s own products, and gifts featuring the company s logo given to visitors or customers at trade fairs held outside Malaysia for promotion of exports are fully deductible expenses. Gifts like travel tickets given on a discriminatory basis to people with no business relationship with the company are not deductible promotional expenses. 5. The registration of patents and trademarks overseas are granted a double deduction. [Tutorial note: reference PU(A)4/2007] 6. Food and drinks served at product launches, redemptive vouchers to customers and trips to dealers for achieving sales targets are wholly related to generating sales. The gift to a customer on the birth of his daughter is not related to the making of sales and is not deductible. 7. Contributions to approved funds is allowable but limited to 9% of the employees remuneration. 8. Amortisation of lease is not deductible as it is not incurred. 5

3 9. The claim for lease rentals on second-hand cars is limited to 50, (c) (d) A trade receivable can be regarded as a bad debt in the following circumstances: The debtor has absconded and cannot be traced. The debtor is in liquidation. The debt is statute-barred. Negotiations to recover the debt have failed and it is not economical to take legal action. There are insufficient assets to enforce payment. The amount of the debt is in dispute. The debtor has died without leaving any asset from which the debt can be recovered. Any FOUR only required mark each, maximum 4 The expenses on the registration of patents and trademarks in Malaysia are deductible as follows:. A resident company which has a paid up capital of ordinary shares of 2 5 million or less; and the limitations on 50% direct and indirect ownership by related or other companies does not apply Companies in manufacturing industries, manufacturing related services industries and agro-based industries with: not more than 50 full-time employees; and annual sales not exceeding 25 million. 3. Companies in service industries, primary agriculture and information and communication technology (ICT) industries with: not more than 50 full-time employees; and annual turnover not exceeding 5 million. Tutorial note: reference PU(A) 48/ (a) Jaison and Vinod (i) Computation of provisional adjusted income Year of assessment 20 Net profit per partnership account 274,700 Less: Capital profit on sale of real property (0,200) 264,500 Add: Non obligatory contribution to approved pension fund,000 Partners private expenses: Life insurance premiums 9,000 Interest on capital 4,000 Interest on loan to purchase Vinod s home 2,000 Salaries 200,000 26,000 Provisional adjusted income 480,500 * Less: Partners salaries 200,000 Interest on capital 4,000 Loan interest on Vinod s home 2,000 Partners life insurance premiums 9,000 (25,000) 8 Divisible income 265,500 * *marks are given for description Tutorial note: subject to restriction of 9%. % added back. 6

4 (ii) Partners statutory income Year of assessment 20 Jaison Vinod Share of divisible income 32,750 32,750 Salary 00,000 00,000 Interest on capital 2,000 2,000 Loan interest 2,000 Life insurance 4,500 4,500 Adjusted income 239,250 24,250 * Less: Capital allowance (7,500) (7,500) Statutory income 23, ,750 * 5 *marks are given for description (b) Vaz (i) Income tax computation Year of assessment 20 Statutory business income from partnership 50,000 Horse race winnings 25,000 Aggregate statutory income from business 75,000 * Add: Non-business income: Indian town council (foreign income not subject to tax) NIL Rental income 7,200 Expenses (not incurred in the production of income) Meals NIL Laundry NIL 7,200 Honorarium (exempt) NIL (Tutorial note: exemption under Sch 6 para 32E) Aggregate income 82,200 * Less reliefs Personal 9,000 Child: Dud Lee (maintained by his own father exclusively) NIL Juuga,000 (Tutorial note: unmarried child during the year with no income) Wife relief 3,000 (3,000) Chargeable income 69,200 Tax payable: First 00,000 4,325 Remainder at 26% 7,992 32,37 *marks are given for description (ii) Vaz must submit his tax return for the year of assessment 20 by 30 June

5 3 (a) (i) The conditions for a claim for capital allowances are: There must be a business being carried on. The asset must be a qualifying asset, i.e. machinery or plant. The qualifying expenditure must have been incurred by the owner of the asset (legal or beneficial). The asset must be in use in the business. mark each condition 4 (ii) Where a company has more than one business, a capital allowance claim can be made only in the business in which the qualifying asset is used. If the asset is used in both businesses, then the capital allowance shall be apportioned on a just and reasonable basis. (b) (c) Kolam Sdn Bhd Capital allowance for the year of assessment 20 Qualifying Non qualifying Reason expenditure expenditure Machine A 0,000 Foreign exchange loss 2,000 Realised Machine B Initial payment 50,000 Instalment payments: Capital portion (0,000 x 9) 90,000 Interest portion (,000 x 9) 52,000 9,000 Revenue expense Initial allowance at 20% 30,400 Annual allowance at 4% 2,280 Capital allowances 5,680 6 Methen Sdn Bhd (i) Qualifying building expenditure and residual expenditure Qualifying building expenditure (QBE) Cost of construction 80,000 Less: cost of offices (4/30 x 80,000) (08,000) QBE 702,000 Allowances received: Initial allowance at 0% (2007) (70,200) Annual allowances at 3% x 4 years (2007 to 200) (84,240) Total allowances received 54,440 Residual expenditure (RE) at January ,560 4 (ii) Industrial buildings allowances () (2) Disposal proceeds (excluding land) 750, ,000 Qualifying proportion (26/30ths) 650, ,000 Less: RE at January 20 (from (i)) (547,560) (547,560) 02, ,440 Balancing charge () 02,440 Balancing charge (2) (restricted) 54,

6 (d) Nayar Sdn Bhd Year of assessment 200 Industrial building allowance NIL Year of assessment 20 QBE 500,000 Industrial building allowance (/0 x 500,000) 50, (a) A royalty is deemed to be derived from Malaysia in the following circumstances: the royalty is charged as an outgoing or as an expense against income accruing in or derived from Malaysia; or the responsibility for the payment of the royalty in the basis year for a year of assessment lies with a person who is resident in Malaysia for that basis year; or the government, local authority or state government has responsibility for the payment of the royalty. 3 (b) () Withholding tax is not due as Sandoshaam Sdn Bhd is not resident in Malaysia and its income is neither derived nor accruing to Malaysia. 2 (2) Withholding tax is not applicable as the royalty income is attributable to a Malaysian business run by a foreign company. 2 (3) Withholding tax is due, as the payer is a Malaysian tax resident company that uses the technical know-how in all its manufacturing operations. The fact that the payment is based on the Phillipines annual sales revenue is only relevant to the method of calculation, not the tax position. 2 (4) The purchase of the water purification equipment is a capital payment for the acquisition of an asset on which no withholding tax is due. 2 8 (c) Financial instruments on which the interest payments are NOT subject to withholding tax: Securities issued by the government. Securities guaranteed by the government. Bon Simpanan Malaysia issued by Central Bank Malaysia to any individual. Any instrument on which the interest is paid or credited by any person carrying on the business of banking or finance in Malaysia and licensed, provided that the recipient is not resident in Malaysia. Bonds and securities issued by Pengurusan Danaharta Nasional Berhad. Merdeka Bonds issued by Bank Negara Malaysia. Bonds (other than convertible loan stock) issued by companies listed on the MESDAQ. Any FOUR items only required mark each, maximum (a) Sales tax is due within 28 days from the expiration of each of the six taxable periods of two calendar months. If the sales tax is not paid on the due date then penalties are payable as follows: 0% of the unpaid sales tax; a further 0% if the sales tax remains unpaid a further 30 days after the imposition of the first 0% penalty; and an additional 0% penalty for every succeeding 30 days or part thereof, up to a maximum of 50%. 4 9

7 (b) Samathanam Sdn Bhd Computation of sales tax and penalties Taxable period Sales Sales tax Penalty July to August 70,000 7,000 2,00 (0% + 20% x 7,000) + + 2* September to October 80,000 8, (0% x 8,000) + + * 5,000 2, *Note: marks are allocated for taxable period, computation of sales tax and computation of the penalty. 20